We localized functionally active IFN receptors to the basolateral membrane of human fetal retinal pigment epithelium (hfRPE). Activation of these receptors inhibits 5% FBS, basic fibroblast growth factor (bFGF), platelet-derived growth factor (PDGF), and epidermal growth factor (EGF) induced RPE proliferation and migration. In contrast, type I IFN (IFN and IFN) did not affect RPE proliferation.The inhibitory effects of IFN on hfRPE were significantly blocked by JAK inhibitor I and by AG490 (JAK2 inhibitor), but not by JAK3 inhibitor. In addition, activation of this JAK/STAT pathway up-regulates interferon regulatory factor 1 (IRF-1), but has no effect on IRF-2 and ICSBP/IRF-8. Interestingly, IFN significantly stimulated the proliferation of cells from adjacent choroidal tissue. Addition of IFN to the basal, but not the apical bath, significantly increased fluid transport (JV) across hfRPE monolayer. The IFNg induced JV increase was significantly blocked by a specific inhibitor of the cystic fibrosis transmembrane conductance regulator (CFTR) (CFTRinh-172). We localized CFTR protein to the basolateral membrane of hfRPE. IFNg induced JV increase was blocked by pretreatment with cyclohexamide (4 or 24 hours). IFNg had no measurable effects on intracellular cAMP or Ca2+ levels. IFN did however increase the phosphorylation of P38 MAPK. In addition, the IFNg induced JV increase was significantly reduced by the addition of P38 MAPK inhibitors, SB203580 and SB202190. A further JV decrease was produced by the subsequent addition of CFTRinh-172. Although IFNg has no measurable effect on intracellular cAMP, IFNg stimulated Jv increase was significantly inhibited by specific protein kinase A (PKA) inhibitor (H-89) and Rp-8-Br-cAMPS, which competitive blocked cAMP binding to PKA and blocked the effect of cAMP. IFNg also significantly unregulated inducible nitric oxide synthase (iNOS) in RPE. Nitric oxide donor (NOC-5) significantly stimulated JV and Pretreatment with CFTRinh-172 blocked the effect of NOC-5 on JV changes. Further experiments showed that IFN-induced JV increase was significantly blocked by aminoguanidine hydrochloride (iNOS inhibitor). We conclude that IFNg inhibits RPE migration and proliferation, activates CFTR-dependent fluid absorption across RPE in vitro and in vivo, and that JAK/STAT1/IRF-1, P38 MAPK and NO, PKA are all involved in mediating these responses. These finding suggest several therapeutic targets for treating proliferative retinal diseases and removing the fluid accumulation in the subretinal space that occurs following many retinal pathologies.